The committee is of the opinion that a separate chapter for private companies be introduced in the Companies Act, 1956, or even a separate law be enacted for them.
Committee members indicated that the suggestions would ensure that private companies, especially the smaller ones, enjoy certain exemptions.
For one, there could be no need for special resolutions in most cases. Even the definition of a relative in the Companies Act could be diluted for these companies.
Private companies might even be given greater flexibility in matters of appointment and functions of directors. The burden of filing returns and registering with government agencies could also be reduced.
A new group of extremely small private companies is also expected to be identified, which might not need to bother with any formality.
The committee, which is expected to make public its recommendations on Thursday, is expected to seek limited liability partnerships to give them a corporate character.
This will enable partnerships to continue even if a partner withdraws. At present, this entails dissolving the partnership.
Suggestions to introduce limited liability partnerships in phases, where initially only certain entities will be asked to sign up, are also expected.
The government has already initiated steps to raise the number of partners in a firm from 20 to 50.
The aim was to minimise regulations and reduce pressures on the management, a committee member said. The existing Companies Act made it difficult for small companies to professionalise and grow and the committee
